A Whitehall paper dealing with the Digital Economy Act has declared that internet service providers will pay 25 per cent of the cost of notifying customers believed to be infringing copyright, as well as the same percentage of the cost of appeal administration.

The remaining costs will be shouldered by the copyright holders, who must separately identify users who they consider to be infringing copyright and then notify their ISP.

The ISP must issue three warnings to the consumer before legal action can take place under the act. ISPs have argued that, as they see no benefit from the actions of the bill, they should pay no costs. They also claimed that costs would have to passed on to consumers.

The Digital Economy Act was passed this year, and claims to protect the rights of copyright holders against illegal downloading, piracy and digital replication.

"The notification costs of ISPs and Ofcom as regulator are to be split 75:25 between copyright owners and ISPs on the basis of the costs of an ISP which is an 'efficient operator' as verified by Ofcom. The regulator costs also include the costs related to the appeals system, " said the report.

The paper argues that asking copyright owners to foot 100 per cent of the bill would not incentivise ISPs to pursue the charges with due efficiency.

"Protecting our valuable creative industries, which have already suffered significant losses as a result of people sharing digital content without paying for it, is at the heart of these measures," he said.

"The Digital Economy Act serves to reduce online copyright infringement through a fair and robust process and at the same time provides breathing space to develop better business models for consumers who buy music, films and books online.

No fees are due to be charged to consumers if they decide to appeal against a charge under the act, although the government has indicated that it reserves the right to change this should it see fit.

Finalisation of the code by Ofcom was initially timetabled for December, 2010 - but complications arising from the submission of the costs scheme to the EU has seen the regulator granted a three month extension.

Unnamed copyright owners' responses to the paper indicated that they largely felt that the allocation ratio of costs was "aribitrary", feeling instead that ISPs should handle the bulk of them as it would be their notification processes which inferred the costs.

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Huh... no fees would be passed on to the consumers through the act of increasing the operating cost of an ISP and therefore reducing profit? They wouldn't just push that cost onto their subscribers?

I'm glad i'm leaving this country.

[edit]
Surely, if copyright infringement is as widespread as everyone claims then this could, in the worst case scenario, effectively run ISPs out of business, bankrupt consumers and shut down internet access for the majority of the population.

Scenario 2 is that people do comply with the letters which results in ISPs pushing up the costs for their consumers, piracy rates drop (probably) without a linked increase in consumption/purchases. High-bandwidth internet connections are no longer needed, rollout of improved services and paying for those services is unjustified - ISPs require rightsholders pay for preferred bandwidth rates to entice growth in business from consumers.... Rights holders do not see a massive increase in revenue but need something or someone to blame for this perceived lack of increase. There is a legal battle fought between ISPs and content providers over who pays what and when and the level of access provided to each service on a particular connection.

Where does it go from here?

Edited 1 times. Last edit by James Prendergast on 17th September 2010 1:08pm

"piracy rates drop (probably) without a linked increase in consumption/purchases."

thats all that will happen... and those that continue to pirate will find other ways to obtain there wares...

copyright holders should foot the whole bill, that way it'll make sure they get their facts right, instead of just guessing who is pirating like they do at the moment (or always assuming poor sales is due to pirates)...

Edited 2 times. Last edit by James Verity on 17th September 2010 2:45pm

This piracy argument needs people to look instead of being emotional. Look on the DS for example. By the time a game has been on the shelves for a few hours the warez sites are FULL of the game files. Whether pirates would buy those games or not is arguable, but the piracy is there. Piracy is theft, whether you like it or not. You would not walk into a shop and steal a game from the shelves, so why is downloading an illegal copy any better? Every time I am on a plane i see at least one person with an R4 in their kids DS. Some of the kids clearly cannot do it themselves which means the parents are encouraging their kids to steal, because that is what it is.

This piracy argument needs people to look instead of being emotional. Look on the DS for example. By the time a game has been on the shelves for a few hours the warez sites are FULL of the game files. Whether pirates would buy those games or not is arguable, but the piracy is there. Piracy is theft, whether you like it or not. You would not walk into a shop and steal a game from the shelves, so why is downloading an illegal copy any better? Every time I am on a plane i see at least one person with an R4 in their kids DS. Some of the kids clearly cannot do it themselves which means the parents are encouraging their kids to steal, because that is what it is.

An interesting solution that surely will persuade ISPs to take a tougher attitude on piracy. However, I doubt piracy will be an issue for the gaming industry for long. The transition of games from a commodity to a service is accelerating, and does anyone really doubt that cloud computing will dominate all aspects of gaming (bar perhaps mobile, which amittedly is likely to only keep growing) come the next console cycle?
Well here's hoping, at least.

Itís not quite accurate to say that there will be no cost to the consumer, as thatís precisely who the ISPs will pass on their portion of the costs to. The rights holders bought and paid for the DEA, so to expect ISPs (and consequently, ISP users) to pay for it is something of a slap across the face. Itís also not quite right to describe the fines and so forth as prosecutions, as that would imply non-compliance with the Act and its associated Code would be a criminal offence as opposed to a civil/regulatory infringement.

Mr. CEO chappie up there is utterly wrong to describe piracy as ďtheftĒ, as the two are completely distinct in every way. The most obvious lies in the shop example he gives Ė you steal from a shop, they lose their copy; if you download a file, itís a replication and thus nobody loses their copy. If you want to argue that a downloaded copy is a lost sale, there are countless studies that strongly indicate that this is not the case. Indeed, the vast majority of the studies indicate that consumers who pirate actually spend the most amount of money on legitimate copies. Yet there is not a single verifiable piece of research that indicates that piracy costs the games, music or film industries a single penny. If you know of one, link to it Ė they simply donít exist.

Who is going to decide what considered pirated and what is not ? Can we get exemption if the copyrightholder does not offer a legal way to obtain in the UK (like the digital service does sell to the UK, as it happened in the past or TV shows) ? Or if i obtain a different version of the same material (foreign language films also unavailable)... Otherwise it seems to be a desperate act to "we will tell you what is legal" - and anyone can claim that the content is owned by them ?

Tom, I like that idea, if a copyright holder with-holds a product from a region...

they should also bring in ruling to cover over pricing in certain regions aswell (above and beyond the exchange rates and taxes) and not allow companies to charge more in certain regions for the same product being sold quite a bit cheaper elsewhere...

Edited 2 times. Last edit by James Verity on 17th September 2010 9:34pm

@ David Stenow,
I can say with absolute certainty that cloud gaming will not dominate the next generation of consoles.

@ Mark Greenshields,
This is a surprising trend to Americans. The majority of DS owners here have never even heard of an R4. In fact, I've never even seen one even though I attend trade shows and organize local tournaments that include the DS (plus gaming with my own sons and their friends). But I constantly hear how ubiquitous the R4 is in the UK (Europe overall, actually). I'm curious to know if DS hardware and software sales trends between the US and European countries can show how much an impact the R4 has had upon the European market. While you correctly observe that you cannot guarantee that a pirate would have paid for the title, any unaccountable reductions in sales in regions of high R4 usage could make for a heavy argument in the favor of publishers that piracy has impacted sales with a verifiable financial value.

@ James Verity,
Unfortunately it's not so simple. Shipping, storage, marketing, localization, local taxes, local regulations, etc...all work against simple exchange rate prices. I'm not saying publishers are not guilty of padding their margins but it's not simply such either.

It'll be copyright holders that benefit from taking infringers to court so why should any other organisations be picking up any of the costs associated with this. It will undoubtedly affect service costs and that will be passed on to the consumer. The consumer will be paying extra overall and subsidising their crusade. This is not right imo. I agree that piracy is wrong but why should I arbitrarily pay more for the copyright holders admin.